Claims I Mortgage Insurance

Claim and Foreclosure Bidding Servicing Guide

March 1, 2020

YOU-CENTRIC SOLUTIONS THAT MATTER

00869.0220 ©2020 Genworth Financial, Inc. All rights reserved. Genworth Mortgage Insurance underwriters include: Genworth Mortgage Insurance Corporation and Genworth Mortgage Insurance Corporation of North Carolina Claim and Foreclosure Bidding Servicing Guide March 1, 2020

Genworth Mortgage Insurance Corporation Claim and Foreclosure Bidding Servicing Guide March 1, 2020

This Claim and Foreclosure Bidding Servicing Guide (“the Guide”) replaces all previous Claim and Foreclosure Bidding Servicing Guides for claims filed on or after the effective date of this Guide. Please note that our Peak Portfolio Policy (MP 1920) has its own Claim and Foreclosure Bidding Servicing Guide.

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Table of Contents

1) Summary of Changes ...... 3 2) Overview and Introduction ...... 3 3) Requirements for Appropriate Proceedings ...... 4 3a) Commencement of Appropriate Proceedings ...... 4 3b) Foreclosure Times and Redemptions by State ...... 4 4) Foreclosure Bidding Instructions ...... 4 4a) General Foreclosure Bidding Instructions ...... 4 4b) e-Bid (Accessing and Using Genworth’s Foreclosure Bidding Tool) ...... 4 5) Filing a Claim ...... 5 5a) When to File a Claim...... 5 5b) Claim Form ...... 5 5c) How to File a Claim...... 6 5d) How to Submit Supporting Documents ...... 6 5e) How to Check a Claim Status ...... 6 6) Claim Requirements ...... 6 6a) Documents Required to Perfect a Claim ...... 6 6b) Supporting Documentation ...... 8 6c) Claimable Items ...... 9 6d) Supplemental Claims ...... 10 6e) Appeal of Claim Denial or Reduction of Insurance Benefit ...... 10 6f) Protection and Preservation of the Property ...... 11 6g) Listing and Sale of REO Properties ...... 11 6h) Policy Exclusions ...... 11 6i) Claims Curtailment Methodology ...... 12 7) Claim Settlement Methods ...... 12 7a) Settlement Options...... 12 7b) Explanation of Benefits (EOB) ...... 12 8) Credible Evidence ...... 13 9) Subrogation and Deficiency Judgments ...... 14

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1) SUMMARY OF CHANGES

Topic Section(s) New Guidelines Supplemental Claims 6d Details about eligibility criteria for allowable Advances requested in supplemental Claims

Credible Evidence 8 Details about what qualifies as Credible Evidence to rescind coverage on a Certificate

2) OVERVIEW AND INTRODUCTION To support our customers and provide additional information on our new Master Policy MP 1980, Genworth has established a Master Policy Resource Center on our corporate website at http://new.mortgageinsurance.genworth.com/master-policy-info that contains implementation resources, including a high-level change summary and FAQ documents. The Master Policy applicable to your loan (“the Policy”) sets forth the terms and conditions that govern mortgage insurance issued by Genworth. Please refer to the applicable Policy for complete details. This Guide is intended to provide clarification, illustrative examples, and supplemental information on the requirements of the Policy. In the event the requirements of the Policy or this Guide are not followed, it may, in certain circumstances, result in cancellation of coverage, rescission, reduction in the Insurance Benefit, or Claim denial. If there is a conflict between this Guide and the Policy, the terms and conditions of the applicable Policy will control. For ease of reference, capitalized terms used in this Guide have the meanings set forth in MP 1980. We understand the importance of reliable and timely payment of Claims and we are providing this Guide so that you can better understand the process and requirements for:

• Commencement and completion of Appropriate Proceedings • Foreclosure bidding • Filing a Claim • Claim settlement • Claim curtailment • Supplemental Claims • Appeal of Claim denial or reduction of Insurance Benefit In addition to this Guide, Genworth has other resources available to assist Servicers. Visit our website at https://MIservicing.genworth.com/Publications/Default.aspx to access Genworth’s (i) Default Management Servicing and Reporting Guide for Default servicing and delinquency reporting requirements and (ii) Lender Servicing Guide for information related to activation, maintenance and cancellation of MI coverage. In

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addition to links to all Genworth servicing guides, this website contains current announcements and links to servicing forms. We are pleased to provide additional assistance should you have any questions or comments regarding this Guide or the Policy. Please contact the Genworth ActionCenter at 800 444.5664 or via email at [email protected]. The ActionCenter is staffed from 8 a.m. to 8 p.m. Eastern Time to provide you with any support you may need. 3) REQUIREMENTS FOR APPROPRIATE PROCEEDINGS 3A) COMMENCEMENT OF APPROPRIATE PROCEEDINGS Foreclosure should commence within 30 days after the loan remains in Default for six (6) consecutive months, unless GSE Guidelines, the Consumer Financial Protection Bureau’s Mortgage Servicing Rule (“CFPB Rule”) or applicable law provide otherwise. Genworth reserves the right to direct the Servicer to commence foreclosure earlier and in accordance with the Policy terms, subject to applicable law. 3B) FORECLOSURE TIMES AND REDEMPTIONS BY STATE Appropriate Proceedings must be diligently pursued and completed in accordance with applicable law and GSE state foreclosure timelines. Any foreclosure delays must be permitted by GSE Guidelines, the CFPB Rule or applicable law and documented in the Servicing File. 4) FORECLOSURE BIDDING INSTRUCTIONS 4A) GENERAL FORECLOSURE BIDDING INSTRUCTIONS Servicers are required to follow bidding instructions issued by Genworth unless the investor is a GSE. For GSE loans, Genworth requires Servicers to follow GSE bidding instructions. For questions regarding foreclosure bidding, contact the Genworth Claims Department at 800 334.9270 or [email protected]. 4B) E-BID (ACCESSING AND USING GENWORTH’S FORECLOSURE BIDDING TOOL) To Access Genworth’s Foreclosure Bidding Tool: 1. Go to MIservicing.genworth.com 2. Enter your Username and Password and select Login New to the Site? Call the ActionCenter at 800 444.5664 to obtain login credentials 3. Select Delinquency Reporting and Claims 4. Select e-Bid Note: As mentioned above, if a GSE is the investor of the loan, use GSE foreclosure bidding instructions.

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Using e-Bid 1. Enter the Certificate number requiring an e-Bid and click Search • Certificate information displays for confirmation (name, address, and coverage percentage) 2. Verify loan information and click Submit 3. Enter the requested information • Current Property Value: from recent appraisal, broker price opinion (BPO) or sheriff appraisal amount** • Total debt including all fees: unpaid principal balance (UPB), interest, expenses, etc. • Scheduled foreclosure sale date (enter the correct date if incorrect or blank) • Property damage beyond normal wear and tear • Depreciating area • Add comments as necessary ** Note: if there is a variance between the current value and the Original Value, select the appropriate reason for the variance. 4. Click Submit • An e-Bid or comment that indicates who to contact for further instructions appears 5) FILING A CLAIM 5A) WHEN TO FILE A CLAIM In order to file a Claim, one (1) of the following conditions must be met:

• Completion of the foreclosure sale of the Property, regardless of whether certification, confirmation or ratification of the sale has occurred • Conveyance of title to the Property by execution and acceptance of a deed- in-lieu of foreclosure • Closing of a Third-Party Sale by the Borrower You must file a Claim within 60 days of the first to occur of the conditions identified above. If you do not file a Claim by the deadline, we are not obligated to include in the Claim Amount any interest accrued or Advances you paid after the deadline passed. If the applicable Policy for the loan is either MP 1480 or MP 1980, and if the Claim is submitted more than 120 days after the expiration of the deadline, we may deny the Claim. 5B) CLAIM FORM You may use the Uniform Mortgage Insurance Claim for Loss form to file a Claim with us. The Claim form must be itemized, signed by the submitter and completed in full.

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The Claim for Loss form can be obtained on the Genworth MI Servicing Website: https://MIservicing.genworth.com/Publications/Default.aspx.

5C) HOW TO FILE A CLAIM

EDI Industry Standard EDI 260 Claims Transaction Website MIservicing.genworth.com Email [email protected] Mail Genworth Mortgage Insurance Attn: Claims Department 8325 Six Forks Road Raleigh, NC 27615

5D) HOW TO SUBMIT SUPPORTING DOCUMENTS Website MIservicing.genworth.com Email [email protected]* *Please do not submit Claim for Loss forms to this address. It is for supporting documents only.

5E) HOW TO CHECK A CLAIM STATUS To check the status of a submitted claim and validate claim perfection date, please access our Claims on the Web (COW) for updates.

Website MIservicing.genworth.com/COW

6) CLAIM REQUIREMENTS 6A) DOCUMENTS REQUIRED TO PERFECT A CLAIM In order to perfect a Claim, you will need to submit the Core Claim Documents listed below. Copies of documents are acceptable, unless otherwise noted. It is important that the Servicer include complete documentation and activity notes from all applicable systems in order to perfect the Claim. Please be aware that incomplete documentation may cause a delay in processing the Claim and may also result in a reduction of the Insurance Benefit. If the Claim is not perfected within 120 days following the receipt of the initial Claim, the Claim will be denied, subject to certain exceptions set forth in the Policy. Please contact us if you have any questions about Claim documentation.

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Core Claim Documents • Complete Servicing File including: o Workout and loss mitigation activities o Bankruptcy, collections, legal and foreclosure activity o Previous and current servicer activity • Foreclosure chronology o Prepared by foreclosure attorney or agent o Include documentation of any delays in pursuing and completing Appropriate Proceedings • Attorney invoices • Complete pay history with escrow account details from date of Default • Evidence of title transfer and supporting documentation (see chart below) Documentation for Title Transfer

Type of Title Transfer Document Requirements Foreclosure • Executed foreclosure deed, regardless of whether certification, confirmation, or ratification of the sale has occurred • Evidence of Sheriff’s deposit amount and all sale- related expenses (including those debited against the deposit), if applicable • Evidence of Property value dated within 180 days of foreclosure sale Sale of the Property to a • Copy of third-party proceeds check or other third party at a Foreclosure satisfactory evidence of proceeds received or trustee sale • Bidding information including instructions and final bid • Evidence of Property value dated within 180 days of the issuance of bidding instructions or the sale date

Property Redemption • Notification of Property redemption and date (before or after Claim redemption occurred settlement) • Copy of Property redemption proceeds check, or other satisfactory evidence of proceeds received

Deed-in-Lieu of • Copy of deed transferring property and evidence of Foreclosure acceptance by Servicer • Deed-in-lieu approval letter • Evidence of Property value dated within 180 days of the deed-in-lieu approval • Borrower contribution information including original promissory note, if applicable

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Type of Title Transfer Document Requirements Third-Party Sale (Pre- • Sale approval letter foreclosure or post • Borrower contribution information including original foreclosure) promissory note, if applicable • Signed or certified as true copy of original final closing disclosure • Evidence of Property value dated within 180 days of the list date, sale approval date, or sale date

In addition, we may also request the following in order to assess whether we will elect the Acquisition Option:

• Property Access: Upon our request, the Servicer is required to provide Genworth with access to the Property. If we elect the Acquisition Option, we will request the following:

• Recordable but not yet recorded deed transferring good and marketable title to Genworth Mortgage Insurance • Possession of the Property • Any other documents necessary to complete the transfer of title of the Property to us 6B) SUPPORTING DOCUMENTATION If applicable, the following documentation is also required:

• Documentation related to any Advances or expenses paid above published normal and customary limits. o Genworth’s normal and customary limits are available at: MIservicing.genworth.com/Publications/Default.aspx • Bankruptcy documents, including bankruptcy filing and relief/release/discharge dates • Modification agreements in effect at the time of loan Default, complete with signatures • Copy of signed origination note o Required for all pay-option adjustable rate mortgages (ARMs) or loans with negative amortization. o To be provided upon request for all other loan types • Veterans Affairs (VA)/Federal Housing Administration (FHA) Proceeds • If non-GSE loan, documentation demonstrating the amount of consideration the Beneficiary paid to acquire the loan (e.g. loan purchase agreement) • Address verification documents, such as origination appraisal or copy of original note, upon request • Documentation related to Appropriate Proceedings

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• Servicemember’s Civil Relief Act (SCRA) documents including qualification documentation • For GSE pool or second layer coverage, a copy of the primary Claim settlement check and settlement letter • If GSE pool or second layer coverage and the primary insurance was cancelled due to the loan-to-value (LTV) falling below 80%, a copy of the original appraisal and a copy of the interior BPO or appraisal showing the value that the cancellation was based on Please note: Genworth may also request additional documents including the complete Origination File to evaluate first party (lender or lender’s agent) misrepresentation or Pattern Activity as well as to review amounts claimed or to evaluate events between loan origination and Claim filing or any other purpose permitted under the Policy. The loan Origination File and Servicing File for each loan must be complete and accurate and must be maintained in accordance with applicable law and regulatory guidelines. A complete loan payment history, with escrow account details from origination date to Claim filing date, must be maintained in accordance with the Policy or applicable law. For additional information, the Genworth ActionCenter is available at 800 444.5664. 6C) CLAIMABLE ITEMS Examples of Items Included in the Claim Amount • Unpaid principal balance due under the loan as of the date of Default • Accrued interest due, calculated at the Contract Rate (up to the maximum allowed per the Policy) • Allowable Advances paid by the Servicer or Beneficiary during the time period specified in the Policy, for example: o Reasonable and customary Property insurance premiums o Real estate taxes and assessments, not to include late fees or other penalties o Reasonable and customary Property preservation expenses o Condominium fees/homeowner’s association dues o Customary court costs and other reasonable expenses incurred in Appropriate Proceedings, including reasonable attorney fees Examples of Items Deducted from the Claim Amount: • Amounts remaining in escrow that the Servicer or Beneficiary is entitled to as of the last loan payment date • Rent and other payments received before filing the Claim • Hazard and other insurance amounts received by you or the Borrower but not applied to the loan or restoration of the Property • Other funds received to reduce the total indebtedness

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Please consult the Policy for complete information and details about the calculation of the Claim Amount or contact the Claims Department at 800 334.9270 or [email protected] for assistance or additional information. 6D) SUPPLEMENTAL CLAIMS MP 1980 Within 90 days after payment of an Insurance Benefit, the Servicer or Beneficiary will be entitled to submit a supplemental Claim for allowable Advances actually paid by the Servicer or Beneficiary if such Advances were:

• Incurred prior to the date the initial Claim was submitted, but not included in the initial Claim or • Incurred after the date the initial Claim was submitted and during any period for which accrued and unpaid interest would be included pursuant to the applicable Claim settlement option.

MP 1480 Within 90 days after payment of an Insurance Benefit, the Servicer or Beneficiary will be entitled to submit a supplemental Claim for allowable Advances:

• Incurred prior to the date the initial Claim was submitted and • Actually paid by the Servicer prior to the submission of the supplemental Claim, but not included in the initial Claim All Other Policies Within 90 days after payment of the Claim, the Insured shall be entitled to submit a supplemental Claim in an amount equal to allowable advances made prior to the date we received the initial Claim that were not included in the initial Claim. 6E) APPEAL OF CLAIM DENIAL OR REDUCTION OF INSURANCE BENEFIT The Servicer or Beneficiary has the right to appeal any Claim curtailment, Claim denial, Certificate cancellation or rescission within 90 days of our decision for Certificates issued under MP 1980 and within 120 days of our decision for Certificates issued under MP 1480. Please check your Commitment/Certificate of Insurance for your applicable policy form number. The Servicer or Beneficiary must provide all information and documentation necessary for evaluation of the request within the appeal period. Appeals due to a reduction in the Insurance Benefit should include a Supplemental Claim for Loss Form. Please note that in many cases a reduction in the Insurance Benefit is due to Genworth not receiving complete documentation with the initial Claim submission; for example, the complete Servicing File. Please submit your Supplemental Claim for Loss form through the same submission channels outlined in Section 5c) How to File a Claim. Supporting documentation for the appeal may be submitted via email to [email protected].

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6F) PROTECTION AND PRESERVATION OF THE PROPERTY In order to protect the Insured’s or Beneficiary’s rights under the Policy, the Servicer should determine the occupancy status and condition of the Property immediately following the conveyance of the Property title to the Insured. Also, the Servicer should take appropriate measures to assure good and marketable title and that the Property is preserved and protected. Therefore, it is the Servicer’s responsibility to advance:

• Reasonable and customary Property insurance premiums • Real estate taxes that become due and payable on or after the date of Default • The cost of engaging in Appropriate Proceedings • Reasonable attorney fees • Reasonable and customary expenses necessary for the protection and preservation of the Property Although prior approval for Advances is not required by Genworth, the Servicer is encouraged to obtain prior approval since we may disallow certain Advances if in our judgment the Advances were not reasonable and customary. 6G) LISTING AND SALE OF REO PROPERTIES Once the Property is vacated, the Servicer should obtain a current BPO or appraisal and list the Property for sale at fair market value as soon as possible. Any purchase offers received prior to the settlement of the Claim must be presented to Genworth for approval or rejection along with an interior appraisal or BPO including interior photographs and any repair addendums dated no more than 180 days from the list date or sale approval request date. To expedite the evaluation of the offer, please email the offers details to [email protected]. Within 10 Business Days of receiving a request for approval of a purchase offer, Genworth will approve or deny the request. If additional information is needed to evaluate the request, we will deny the request within 10 Business Days and indicate the additional information that is required. If we do not respond within this timeframe, the request is deemed to be approved. MP 1480 and 1980 Please note that a delay in timely listing properties for sale or presenting purchase offers to Genworth may result in a Claim denial or a reduction in the Insurance Benefit due to an adjustment of any interest and Advances accruing during the period of delay. 6H) POLICY EXCLUSIONS Please see the Policy for a list and detailed explanation of coverage exclusions under which Genworth may cancel, rescind, or deny coverage, or reduce the Insurance Benefit. Please note that we will deny any Claim that is not perfected within 120 days following submission of the initial Claim. See Section 6e) Appeal of Claim Denial or Reduction of Insurance Benefit for information about appealing a Claim denial.

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If you have any questions about coverage exclusions, please contact the Claims Department at 800 334.9270 or [email protected] for additional information. 6I) CLAIMS CURTAILMENT METHODOLOGY Reduction of Interest and advances When a Servicer does not meet the requirements and timelines in the Policy, Genworth may adjust the Claim Amount by deducting interest and Advances corresponding to the number of days that an activity was required but did not occur. For example:

• If a Claim is submitted after the 60-day period set forth in Section 5a) When to File a Claim, we may adjust from the Claim Amount any interest accruing and Advances incurred after such 60-day period. For other conditions that may affect the Insurance Benefit, please refer to the governing Policy. Any reduction or adjustment to the Claim Amount will be itemized in the Explanation of Benefits supplied with the Insurance Benefit payment. Loss Mitigation Review When loss mitigation activity efforts do not comply with the Default Management Servicing and Reporting Guide, GSE Guidelines and the CFPB Rule, Genworth will determine the estimated resulting damage and may adjust the Claim accordingly. For example, if the GSE Guidelines require a certain loss mitigation activity to occur by day 60 of the Default, but the Servicer does not engage in that activity until day 90, Genworth may reduce the Claim Amount by deducting 30 days of interest and Advances. Any reduction will be itemized in the Explanation of Benefits supplied with the Insurance Benefit payment. For further information regarding servicing of loan in Default, please see the Default Management Servicing and Reporting Guide. 7) CLAIM SETTLEMENT METHODS 7A) SETTLEMENT OPTIONS Genworth may select from the following Claim settlement options when settling the Claim, as specified in the applicable Policy:

• Percentage Option • Third-Party Sale Option • Acquisition Option • Anticipated Loss Option Please consult the Policy for complete details about the Claim settlement options or contact the Claims Department at 800 334.9270 or [email protected] for additional information. 7B) EXPLANATION OF BENEFITS (EOB)

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The Explanation of Benefits (EOB) provides a categorized itemization of a Claim settlement. If adjustments are made to the Insurance Benefit, an explanation for the adjustment is provided. An EOB is provided with each Claim settlement and is available online at https://MIservicing.genworth.com. 8) CREDIBLE EVIDENCE If your loan has been submitted and approved for coverage under Genworth’s Your Choice Coverage (YCC) program, please see our Rescission Relief Guide. MP 1980 Genworth must have Credible Evidence of a Significant Defect in order to rescind coverage on a Certificate. A Significant Defect is a Defect existing on the Certificate Effective Date that would have made the loan ineligible for insurance. For more information, please see the definition of Significant Defect in the Policy. MP 1480 Genworth must have Credible Evidence of an Eligibility Criteria Violation, first party misrepresentation, or Pattern Activity in order to issue a Rescission Notice rescinding coverage on a Certificate. MP 1480 and 1980 Examples of Credible Evidence include, but are not limited to any one or more of the following:

• Undisclosed Borrower mortgage involving the same loan originator as the subject loan (as the loan originator should be aware of and detect such other mortgage and ensure it is disclosed as part of the subject loan Application) • A review appraisal indicates a variance of fifteen percent (15%) or more in the value of the Property as compared to the Original Value and there is evidence that the appraiser manipulated or selectively utilized information in producing the appraisal that established the Original Value(e.g., if the sales history of the subject Property or its relation to comparable properties is misrepresented) • Verification of origination documentation generated by a first party that was confirmed to be falsified. For example: verification of employment, verification of assets, verification of rent • Any situation where a straw buyer is presented as the Borrower for purposes of qualifying an otherwise unqualified Borrower if it can be shown the first party was aware of the straw buyer • Any situation where the Borrower has presented false identification where it can be shown a first party was aware • An investigation by regulators or law enforcement agencies has established that there was first party misrepresentation involving the loan • A first party, the Servicer, Insured, third-party Beneficiary, or owner of the loan has reported first party misrepresentation to Genworth • The loan has been repurchased as a result of first party misrepresentation

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• The final HUD-1/Closing Disclosure indicates that the Borrower received interested party contributions that exceeded the guideline limit • The final HUD-1/Closing Disclosure indicates that the Borrower failed to make the required down payment at closing • The final title report indicates an undisclosed second lien on the subject property 9) SUBROGATION AND DEFICIENCY JUDGMENTS Genworth is subrogated, upon payment of an Insurance Benefit, to the Insured’s or Beneficiary’s rights of recovery against the Borrower. Therefore, Genworth may pursue a Borrower for its loss when permitted under applicable law. The Servicer should foreclose and bid in a manner that protects the deficiency rights unless otherwise instructed by Genworth. Please see the section of this Guide entitled 4) Foreclosure Bidding Instructions for bidding instructions. Genworth may request the Servicer to foreclose in a manner outside of the normal and customary state foreclosure process to preserve its rights of recovery (e.g., judicial foreclosure rather than non-judicial). All associated expenses incurred by the Servicer will be handled in accordance with the section of the Policy related to deficiency judgments. If your pursuit of a deficiency judgment would increase the cost associated with a foreclosure, contact the Recovery Department at [email protected]. Should Genworth elect to pursue a deficiency judgment against the Borrower, Genworth or our designee may request that the Servicer and Beneficiary provide such information and execute and deliver such documents and instruments necessary to transfer, assign, and secure your subrogation rights. Genworth and the Beneficiary may jointly elect to pursue a deficiency judgment. In that case, all expenses associated with the preservation and pursuit of a deficiency judgment will be shared pro rata between Genworth and the Beneficiary in accordance with the Policy.

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